Smaller companies report: Weds close

SHARES in UK smaller companies closed weaker today reflecting declines in the wider market and with Dream Direct shedding 27% of its value.

At the close, the FTSE Small Cap index was 5.5 points weaker at 3,200.6, having reached a low of 3,193.0, after reversing from a peak of 3,206.2. Meanwhile, the FTSE 100 index ended 67.8 points lower at 5,423.2.

Dream Direct remained one of the worst-performing small caps stocks at midday, dropping 26p to 69½ - a 27% decline - after the home shopping retailer of nostalgic and entertainment products unveiled widening first half losses and warned of difficult market conditions.

Trading resumed in shares of Pharmagene today with a fall of 7p to 17p following publication of the prospectus for its planned merger with US firm Asterand.

Shares in Public Recruitment shed 18p to 41½p as the group confirmed plans for an EGM in December to vote on plans for Granville Baird to redeem £4.6m worth of loan notes in the firm.

Elsewhere on the downside, Focus Solutions shares lost 6p to 42½p despite a narrowing of losses at the half-way mark.

Seymour Pierce, however retained its 'buy' recommendation, pointing out that the first half had seen significant progress in reshaping the business and developing a platform for future growth. New contract wins, including a £2m deal with Barclays Bank, provide confidence in Focus' technology, it said.

On the upside, shares in Caspian Holdings topped the small cap leaderboard, up 2½p to 9p after the firm said it has completed the first stage of the workover programme at its Zhengeldy oilfield in Kazakhstan.

Sarantel 'A' shares took on 6½p to 44½p after news that pre-tax losses widened to £5.6m in the year to 30 September from £4m a year earlier was outweighed by a sharp increase in sales, and bullish prospects for 2006.

The group, which makes specialist antennas for wireless devices, listed on Aim in March and said sales more than tripled to £2.8m from £800,000 as shipments of its antennas jumped 450%.

Shares in ITM Power gained 18p to 132½p after the firm, which is developing hydrogen fuel cells, said it has made two improvements in its technology that bring it much closer to market and increase the value of its patents.